Area's Smaller Shipyards Hurting With Less Work

February 27, 1999|By DENNIS O'BRIEN Daily Press

NORFOLK — Excluding Newport News Shipbuilding, Hampton Roads' private repair yards received a third less work combined than Norfolk Naval Shipyard did over the past five fiscal years, according to a new General Accounting Office report.

Furthermore, while the private yards' share fluctuated from year to year, their share dropped precipitously in 1998, according to the report, commissioned by Rep. Owen B. Pickett, D-Virginia Beach.

"It was an exceptionally poor year for ship repair yards in South Hampton Roads, and there was a spike-up in money going to Norfolk Naval Shipyard," Pickett said Friday. "It has not been explained by the Navy, and I don't know that an explanation would be helpful, because damage done to our private shipyards is not going to be repaired."

That damage included the loss of hundreds of jobs at Norshipco, South Hampton Roads' largest private yard.

According to the report, the Navy in fiscal 1998 made available less work for private yards than it initially indicated it would in a September 1996 planning report.

The Navy reduced the size of maintenance contracts for seven vessels, deferred until fiscal '99 work on one vessel and eliminated scheduled maintenance on three ships - one of which was decommissioned instead.

Additionally, the report said, during fiscal '98 the Navy transferred four jobs initially lined up for private shipyards into Norfolk Naval Shipyard.

The practical effect of that shift meant that as fiscal '98 progressed, smaller shipyards such as Norshipco employed far more workers than it could afford, hoping the promised work would arrive.

It didn't.

Smaller repair yards in Hampton Roads had long sounded the alarm that continued set-asides or diversions to the Navy yard would translate into lost jobs.

It rang true last October when a San Diego yard bought Norshipco and slashed its workforce by more than half because of the lack of work.

Some 850 people lost their jobs.

"I think it proves to us in numbers what we've been saying all along," Norshipco President Al Krekich said of the report. "The bottom line was that a significant amount of resources were diverted from private yards."

Krekich, a retired vice admiral who served as commander of Naval Surface Forces Pacific Fleet, said that his company and its parent, United States Marine Repair, did their own analysis of the distribution of naval repair dollars and reached similar conclusions.

The Navy maintains publicly owned yards so it has control of what gets repaired when. The yards may seem more expensive to operate in peacetime, the argument goes, but they're priceless during wartime.

As a government-run institution, the Navy yard gets funding in advance along with the rest of the Defense Department. That's why the Navy diverts some jobs to the yard during the course of the year -Eto use what it's paid for.

Usually the jobs are spaced out, planned so that there are no large gaps in the yard's workload. But sometimes circumstances can change that: For example, a ship scheduled for maintenance may instead be on prolonged deployment; or perhaps a ship needs less work than estimated and its premature departure from the yard's pier creates a gap. So the Navy sends work that had been headed for private yards into the public yard to fill the gaps.

The Navy couldn't explain to Pickett or the GAO what caused the gaps in fiscal '98.

The report did include some cause for optimism. Historically, private yards have gotten tens of millions more than they did last year, and the Navy is indicating that the pattern of repair dollars doled out in fiscal '98 was an aberration and will not be repeated.

"The Navy is saying while they don't expect any growth than ship repair, they said they be more consistent in the allocation of the existing ship repair dollars," Pickett said.

The Navy's singing the same tune to the private yards, which chime all they want is a chance.

"All we're saying is we'd like to compete for the work," Krekich said. "More money should be devoted to ship repair and maintenance, and you get more bang for the buck in private yards."

Because nuclear-capable Newport News Shipbuilding can do work no other private yard in Hampton Roads can, and because it traditionally gets the lion's share of area repair dollars, the report puts Newport News in a separate category from the smaller yards that are the focus of the report.

- Dennis O'Brien can be reached at 247-4791 or by e-mail at dobrien@dailypress.com